One of the main reasons why this year’s Budget has been described as farm-oriented is the stress it lays on augmenting irrigation coverage through massive investments over the next five years. Finance minister Arun Jaitley, in his Budget speech, has said that the government intends putting all the 89 ‘active’ irrigation projects under the Accelerated Irrigation Benefit Programme (AIBP) on fast track, while promising to raise the required Rs 86,500 crore to finance these both through budgetary and extra-budgetary resources.

The task is huge considering that some of these projects — which will collectively bring eight million hectares of agricultural land under irrigation — have been pending for over four decades.

The government has promised to complete at least 23 of the 89 projects (see list), including a few on which work had started in the mid-1970s, before the end of next financial year — i.e. by March 2017. Another 23, that will form phase II, are expected to be completed by 2020.

Accelerated acceleration

It’s not difficult to see why this renewed push for irrigation is important for the farm sector. Of the nearly 142 million hectares of net sown area, only about 64 million hectares, less than half, has assured access to irrigation facilities. The rest still depend on rainwater. Moreover, even within the overall irrigated land, nearly 60 per cent is based on pumped ground-water, banking on free or highly-subsidised power provided to farmers in most states, thereby putting further pressure on a fast-depleting critical resource.

The irrigation network created under surface irrigation schemes, on the other hand, covers only about 25 million hectares of agricultural land. A substantial part of this capacity has been built through the AIBP, which was started in 1996 as a central financial assistance programme to states for completing ongoing irrigation projects costing Rs 1,000 crore or more at that point in time. The assistance was to be given in the form of loans. Later, smaller projects were included as well in order to enable more states to take benefit. In 2006, the AIBP funds were converted into 100 per cent grants.

Since the beginning of AIBP, 297 major and medium irrigation projects and 16,769 minor projects have been approved for funding. Only 143 of the major ones have been completed, and 89 of them are in different stages of construction. It is these that the Narendra Modi government has now decided to put on fast track. The remaining 65, which are yet to start, are likely to be reviewed to assess whether it would be feasible to go ahead with them at all.

Maharashtra has been the biggest beneficiary of AIBP, having got funding for 64 out of the total 297 irrigation projects approved under the programme. Andhra Pradesh with 33 projects, Orissa with 18, Karnataka with 16, and Gujarat with 15 projects have been the other major beneficiaries.

But like all big programmes, the AIBP, too, suffered from inadequate central funding, as its scope expanded to include more and more projects. The result: time and cost overruns in most of the projects. “In the last three years, from 2012-13, the Centre provided Rs 13,167 crore for the programme. In the three year period between 2011 and 2014, the total expenditure on the programme, including the state share of money, was Rs 28,976 crore”. These monies, as Shashi Shekhar, secretary in the Ministry of Water Resources, puts it, were just enough to cover the cost overruns caused by the delays.

The significant step that Arun Jaitley’s latest Budget has taken is to look for funds outside of the regular budgetary allocations. This includes taking the market route to raise funds. A dedicated irrigation fund has been created under the National Bank for Agriculture and Rural Development (NABARD), which has been asked to issue tax free bonds to borrow money. An initial corpus of Rs 20,000 crore has already been set up through the budget, which NABARD can leverage to mobilize further money from the market. The repayment of these borrowed monies would be done over a 20-25 year period through budgetary support from the Centre and the states.

Under phase-I of the new plan covering 23 projects, a total amount of Rs 13,338 crore would be spent by the Centre and states during the coming fiscal. Phase-II, covering another 23 projects, would require an even larger outlay of Rs 47,536 crore.

Under-utilised capacities

But money is not the only constraint. Problems in land acquisition, and technical difficulties like constructing tunnels in some places have also hampered the execution of AIBP projects.

An important component of the current government’s fresh thrust on irrigation is to ensure that projects that are already completed and under operation are utilised to their full capacities. A survey of these projects has shown utilisation gaps – the difference between the irrigation potential created and the area actually being irrigated – of anywhere between 25 to 55 per cent. That means these projects are serving substantially lower area and lesser number of farmers that they are meant to do.

The government has now asked the Central Water Commission and other agencies to take up 50 out of the 143 completed projects each year and work towards increasing their efficiencies. Each of these projects would now also have water user associations that will decide on how the water is distributed to every claimant in the area.